Wednesday, December 7, 2016

Your Credit Report

Here are the factors that go into determining a credit score:

Payment history – This accounts for about 35% of
the credit score. Carrying balances from month-to-month and missing
payments are two factors. Other factors include the number of missed
payments – one in eight to 10 months is not bad, and how long ago the
payment was missed. Tip: Pay the minimum by the due date.

How much is owed – This looks at the total
outstanding balance in relationship to the total of all credit limits
and accounts for 30% of the credit score. Tip: Pay down debt to at least
30% of the global loan limits.

Account history – The length of time credit account has been active accounts for 15% of the score. The older the credit, the higher the value.

Recent inquiries – This accounts for 10% of the score. Too many inquiries can send a message that a client may need money, which has a negative impact on the score. A client ordering his or her own credit report has no impact.

Type of credit – This accounts for 10% of the credit score. Credit is either revolving as in credit cards or installment as in car loans. Higher scores are given to people with a blend of credit from various sources.

Collection or bankruptcy – This, of course, has a
negative impact on the score. Once discharged from bankruptcy or a
consumer proposal, clients can rebuild credit.

There are also a few new items in the expanded report, which includes
mortgage information and calculates the estimated risk that a client
will default on loans in the near future.
The case study presented at the seminar was also helpful, according
to MacQuarrie. “We found the tips helpful since it showed us ways we
could assist our clients with lower scores improve and how to repair
damaged credit for those who need that extra assistance,” he said. “It
was also good to learn what to look for so we can point out any
discrepancies to our clients”
Since both Equifax and Trans Union deal with millions of pieces of
information on a monthly basis, sometimes mistakes can happen, which can
result in false credit scores. In most cases, consumers are not aware
of the negative information in their reports. Consumers can address
errors on their credit report by calling the creditor in question or
writing to the credit-reporting bureau.
“With so much emphasis on credit scores, it’s vital that consumers
become more aware of what’s being reported in their individual files,”
MacQuarrie said. “It’s equally important to know what affects your
credit score.”